Keynotes

General Notes vs. Other Contract Documents

In a previous Keynotes article¹, general notes were briefly discussed including the observation that general notes frequently include content that is more appropriately, and probably is, indicated elsewhere. However, design professionals seem to embrace the mantra that mentioning it once is good, but mentioning it twice (or more) is even better.

The problem with mentioning a requirement more than once is the potential conflict between the various requirement locations. The CSI principle of "say it once and in the right place" arose out of frequent conflicts between drawings, specifications, and other contract documents, and many of these conflicts are generated through the improper use of notes on drawings.

As mentioned in the earlier article, there are three types of general notes that can be used in a set of construction drawings. Listed below is each type along with the description found in the Uniform Drawing System (UDS), which is a part of the National CAD Standard (NCS):

• General Notes: "Notes that apply to the entire work. As such, general notes apply equally to all disciplines and to all sheets within the drawing set."
• General [Discipline] Notes: "Notes that apply only to a particular design discipline. Users should provide a heading for these notes by replacing the [discipline] place holder with the name of the particular design discipline."
• General Sheet Notes: "Notes that apply only to the particular sheet on which they appear."

General Notes

As described in the UDS, basic general notes provide information that is applicable to all sheets for all disciplines. Therefore, architects (who are, in most cases, the prime design professional) need to make sure that the basic general notes included in the construction documents are applicable to all disciplines. If they apply only to the architectural sheets, then they should be identified as such per the second type of general notes.

Take a look at most 'General Notes' on a set of construction drawings and you will notice that in many cases the notes are many and sometimes lengthy. If architects were to spend a little time to actually read the 'general' notes they always place on the drawings, they will likely find that one of the three following characteristics will apply to most of them:

1. The intent of the note is already addressed in the general conditions of the contract;
2. The intent of the note is already addressed in Division 01 of the specifications; or,
3. The note is only applicable to the architectural sheets.

For example, consider the following note, which, in some variation, is commonly found in many 'General Notes':

Discrepancies between actual condition and drawings shall be brought to the attention of the Architect. Contractor shall submit specific discrepancies for Architect review.

Characteristic #1 would apply to this example since the general conditions will usually address this situation. For projects using the American Institute of Architects (AIA) Document A201-2007, General Conditions of the Contract for Construction, Section 3.2.2 covers the same requirement (see portion with added underline) as in the general note above, but includes more specific direction for the contractor:

Because the Contract Documents are complementary, the Contractor shall, before starting each portion of the Work, carefully study and compare the various Contract Documents relative to that portion of the Work, as well as the information furnished by the Owner pursuant to Section 2.2.3, shall take field measurements of any existing conditions related to that portion of the Work, and shall observe any conditions at the site affecting it. These obligations are for the purpose of facilitating coordination and construction by the Contractor and are not for the purpose of discovering errors, omissions, or inconsistencies in the Contract Documents; however, the Contractor shall promptly report to the Architect any errors, inconsistencies or omissions discovered by or made known to the Contractor as a request for information in such form as the Architect may require. It is recognized that the Contractor's review is made in the Contractor's capacity as a contractor and not as a licensed design professional, unless otherwise specifically provided in the Contract Documents.

If the project does not use AIA Document A201, the architect should review the general conditions that will be used for similar language. If no similar requirement is in the general conditions, then a general note on the drawings, like the example, or a requirement in specification Section 01 73 00 "Execution," would suffice. However, the requirement should be revised to include the method in which the contractor should inform the architect, such as AIA Document G716 Request for Information form, CSI Form 13.2A Request for Interpretation, or some other approved form or electronic method.

General notes that paraphrase requirements provided elsewhere (e.g. the general conditions or specifications) may generate various interpretations. Altered wording used in a general note to simplify it may be interpreted differently than the more specific wording used in another contract document. Even though the intent may have been to replicate a requirement, the paraphrased format of the general note itself could create a conflict.

Another common general note is one similar to the following:

All work shall be performed with the highest level of workmanship standards of the building trades working under this contract.

The first question that should come to anyone's mind after reading the note above should be, "How will it be enforced?" This overarching requirement is akin to requiring design professionals to perform to the highest level of care—something professional liability insurers will refuse to insure. Characteristic #2 would apply to this note, so leave it out and let the specifications establish the minimum level of workmanship through the use of tolerances and reference standards.²

Finally, as an example of characteristic #3, take a look at this 'general' note:

All studs and any other framing are at 24" o.c. minimum unless noted otherwise.

With the possible exception of the structural drawings, the above note is only applicable to the architectural drawings. General notes that are specific to a discipline, should be separated from the basic general notes and located with the discipline sheets to which they apply. Thus, the example note should be placed with the 'General Architectural Notes.'

General [Discipline] Notes

General [Discipline] Notes, as the format implies, is to identify general notes that are specific to a particular discipline—with the bracketed 'Discipline' being replaced with the applicable discipline, such as Architectural, Structural, Mechanical, Electrical, etc. Although the UDS provides a format for titling the general notes for disciplines, very few disciplines actually follow it. Most disciplines will use the title 'General Notes" and place them on the first sheet of their drawings, assuming that readers of the drawings will make the connection. The rare exception is the structural engineering profession, which seems to have universally adopted the format (more on this later).

These notes suffer some of the same afflictions that basic general notes do—primarily Characteristics #1 and #2. General discipline notes also display another affliction that is specific to this type of note: they frequently address the subcontractor/tradesperson.

An example of this problem is illustrated in the following actual note used on the first sheet of mechanical drawings in a set of construction drawings:

The mechanical contractor shall be familiar with all contract documents for all trades and shall coordinate with other contractors.

The problem with the above note is that it specifically addresses the "mechanical contractor." For single-prime contracts, and depending on the project delivery method, the drawings are part of the contract between the owner and general contractor—not the mechanical contractor (who is actually a subcontractor). There is no contract between the owner and a subcontractor. As a matter of fact, AIA Document A201 specifically addresses this in Section 1.1.2 (underline added):

…The Contract Documents shall not be construed to create a contractual relationship of any kind (1) between the Contractor and the Architect or the Architect's consultants, (2) between the Owner and a Subcontractor or a Sub-subcontractor, (3) between the Owner and the Architect or the Architect's consultants or (4) between any persons or entities other than the Owner and the Contractor…

Therefore, all requirements, whether placed on the drawings, in the specifications, or elsewhere, should be directed to the contractor on the project.

Another issue with the example discipline note is the direction given to the mechanical contractor to "coordinate with other contractors." Under a single-prime contract, the general contractor is given the responsibility for coordination—typically in Section 01 31 00 "Project Management and Coordination" of the specifications. Thus, that portion of the note can be stricken based on Characteristic #2. But wait, there is more…

The example discipline note can also fall under Characteristic #1 based on the statement that the mechanical contractor "be familiar with all contract documents." This is basic requirement that is already expressly stated in AIA Document A201 in Section 3.2.2 quoted earlier.

One area where general discipline notes have been taken to the extreme is in the structural engineering field. General Structural Notes, or GSN's as they are commonly referred to, are included with such great detail that they border on the edge of specifications (actually, they have probably crossed that line). Structural engineers have defended the practice by stating that the information is required by the building code. That is partially true.

Section 1603.1 of the 2012 International Building Code (IBC) requires that the construction documents indicate "design loads and other information pertinent to the structural design required by Sections 1603.1.1 through 1603.1.9." However, the sections identified by the IBC only require that live loads (floor and roof), snow loads, wind loads, seismic data, geotechnical information, flood data, special loads, and items requiring special inspection be shown on the construction documents. Nowhere does it mention that material and installation requirements be shown. The specifications are a more appropriate location for these requirements.

General Sheet Notes

General sheet notes are not to be confused with the keynotes used on the sheet—they are simply a general note that applies to the sheet on which it is placed. General sheet notes typically do not apply to a single item on the sheet, but provide written explanatory information for interpreting the graphic information shown on the sheet.

The same general sheet note may appear on multiple sheets of the same type. For example, the following general sheet note may be repeated on all applicable floor plan sheets:

All dimensions are to face of stud unless noted otherwise.

Or the following note may appear on all reflected ceiling plans:

Ceiling heights shown are 9'-0" unless noted otherwise.

However, if a note is used on every architectural sheet because it is applicable to every sheet (Characteristic #3) , then the note should be mentioned only once at the beginning of the architectural sheets as a general discipline note. The general sheet notes, like the other notes discussed, can also find themselves replicating other requirements per Characteristics #1 and #2, so they should be reviewed to prevent duplicating or conflicting information.

Conclusion

General notes are important for proper interpretation of the construction drawings, but like many things, more does not always mean better. General notes used on drawings should be carefully selected and written so as not to duplicate, paraphrase, or contradict other contract documents.

¹ Keynotes No. 3, "Drawing Notations," Spring 2010. 

² Read more about this type of note in the 07/18/11 post of specsandcodes - the blog.

Project Closeout

 

You can see the light at the end of the tunnel.  The project is nearing completion and you are looking forward to moving on to the next big project or taking a long, well-deserved vacation.  However, do not start packing your suitcase just yet—there is much to be accomplished between now and the issuance of the final pay application.  Whether you are the owner, architect, design consultant, contractor, subcontractor, or supplier, many tasks must be completed before the project can be officially closed out.

Project closeout is the period of construction that provides the systematic transition of the project to the owner until the cessation of all construction activity on the project site (except for any work associated with the correction period, discussed later).  Project closeout can be as short as a week for very small projects to as long as three months or more for large, complex projects. 

The closeout transition can be explained as a two-phase process: the pre-substantial completion phase and the post-substantial completion phase (See Figure 1).¹  As the phase names imply, the pivotal point between the two phases is the date of substantial completion.  Therefore, depending on the project, the project closeout process should be scheduled based on the scheduled date of substantial completion.

Substantial Completion

The date of substantial completion is very critical in regard to project closeout.  Substantial completion is defined in AIA Document A201-2007, General Conditions of the Contract for Construction, as the

stage in the progress of the Work when the Work or designated portion thereof is sufficiently complete in accordance with the Contract Documents so that the Owner can occupy or utilize the Work for its intended use.

As the above provision alludes, substantial completion is not limited to a single date—multiple dates of substantial completion may be issued for various portions of the work.  However, it is the final substantial completion date that is of significance to project closeout.

Contractually, the date of substantial completion establishes the point when the contract time ends.  If the date of substantial completion is beyond the contract time, then the contractor may be subject to liquidated damages or penalties if provisions for those are in the contract.  Conversely, if the contractor achieves substantial completion before the end of the contract time, the contractor may receive a bonus if a penalty/bonus clause exists in the contract.

According to AIA Document A201, the architect is the person who certifies the date of substantial completion.  The contractor is required to notify the architect when the contractor believes that substantial completion has been, or will be, achieved.  The architect will then conduct an inspection to verify that the work has, in fact, reached substantial completion.  If the architect concurs with the contractor’s assessment, then the architect will prepare and distribute a Certificate of Substantial Completion that establishes the specific date, as well as other items, such as insurance and maintenance responsibilities, and a list of incomplete items.

At this point, the owner assumes responsibility for the work (unless otherwise stated in the Certificate of Substantial Completion) and is permitted to occupy the building.

PRE-SUBSTANTIAL COMPLETION PHASE

The pre-substantial completion phase is the period of buildup to the eventual transition of the project from the contractor to the owner.  During this phase the contractor retains full control of activities on the project site.  Division 01 should specify the individual tasks that must be accomplished and the items that must be submitted by the contractor prior to establishing the date of substantial completion.

The initiation of this phase should be started on a date appropriate to the project that ensures sufficient time to complete required tasks.

Figure 1 - Diagram of the Project Closeout process.  The closeout process starts on the date of the closeout meeting, which is based on the contractor’s scheduled substantial completion date.  Majority of the closeout tasks occur within the Pre-Substantial Completion Phase.  Owner assumes responsibility for the project after substantial completion, but contractor is required to complete punchlist items within the Post-Substantial Completion Phase.  The scheduled substantial completion and the actual substantial completion may or may not be the same date.

Project Closeout Meeting

The event that signals the beginning of the closeout process is the project closeout meeting.  This meeting may be conducted by either the architect or contractor, but the timing of the meeting should be determined in the contract documents.  In Division 01 “General Requirements” of the specifications, the meeting date should be determined by specifying the minimum number of days prior to the scheduled date for substantial completion the meeting should be held.

The closeout meeting agenda should cover all requirements in the contract documents associated with the full completion of the project.  Topics on the agenda typically include the following:

• Procedures that must be accomplished prior to substantial completion, such as contractor’s preparation of list of incomplete items, or punchlist.
• Starting, testing, and adjusting systems.
• Procedures for commissioning, if applicable.
• Preparation, submission, and review of record documents.
• Preparation, submission, and review of operations and maintenance data.
• Training of owner’s personnel on operation and maintenance of the facility.
• Inspections by building and fire code officials and other authorities having jurisdiction (AHJs).
• Procedures that must be accomplished prior to final completion.
• Procedures for final change order, release of retainage, and final pay application certificate.

In essence, the closeout meeting is to make sure that everyone involved with the project—owner, architect, consultants, contractor, and subcontractors—knows the details and timing of closeout activities to assure a smooth transition.

Starting, Testing, and Adjusting

During this phase of the closeout process, the contractor and its subcontractors need to startup all building systems and make any adjustments necessary to ensure proper operation.  This may be part of a commissioning process if specified in the contract documents.  The contractor should notify the architect when tests and system startups are scheduled so the appropriate design consultants can be present.

Any tests required by the contract documents and not performed during the regular course of construction should be accomplished at this time.  If a test is associated with system startup, then the test should be accomplished following the startup in accordance with the manufacturer’s instructions.  Tests should be conducted in sufficient time to allow performance of the test, analysis of results, preparation of reports, and distribution of reports prior to the date of substantial completion.

Demonstration and Training

The owner must be capable of operating and maintaining the building once the owner occupies it; therefore, the owner should be properly trained.  Demonstration and training can include anything from operating motor-operated roller shades to the complete heating, ventilating, and air conditioning system.

The demonstration and training should be provided for owner’s personnel who will have direct responsibility for the management of the facility and should be conducted by qualified trainers.  Division 01 of specifications should establish requirements for demonstration and training.

Operation and Maintenance Data

Operation and Maintenance (O&M) data are a compilation of documents that usually consist of manufacturers’ printed manuals and instructions that explain how to operate and maintain the systems, equipment, and finishes installed on a project, and typically include manufacturers’ warranties.  O&M data should be submitted by the contractor and approved by the architect before demonstration and training is conducted so the data can be used as training materials.

Format of the O&M data should be specified in Division 01 of the specifications.  The format commonly submitted is a bound hardcopy, but electronic documents saved on CD-ROM or other media are rapidly becoming the norm.

The Punchlist

The contractor is required, prior to substantial completion, to prepare a list of incomplete items per AIA Document A201, Section 9.8.2, commonly referred to as the “punchlist”:

…the Contractor shall prepare and submit to the Architect a comprehensive list of items to be completed or corrected prior to final payment. Failure to include an item on such list does not alter the responsibility of the Contractor to complete all Work in accordance with the Contract Documents.

Although contractors are assigned the task of preparing the punchlist, architects frequently assume responsibility for the preparation.  Reasons why architects prepare punchlists vary from lack of detail in contractor-prepared punchlists to architects desire for greater control in the process.   Regardless of the reason, the punchlist is the contractor’s “to-do list” that must be fully accomplished before final completion.

The General Conditions require the contractor to notify the architect when the project is ready for substantial completion.  The architect and its consultants conduct an inspection that adds to the contractor’s punchlist.  If the architect determines that substantial completion has been achieved, the punchlist becomes an attachment to the Certificate of Substantial Completion.

Record Documents

Sometimes called “as-built” documents, record documents are those documents submitted and turned over to the owner as a record of the construction during the closeout process.  The term “as-built” is not appropriate for these documents as it gives the connotation that the documents indicate work as it was actually installed.  The reality is that the documents convey the installed work to best of the contractor’s knowledge, since much of the information is provided by subcontractors.

Record documents may consist of marked up copies of the drawings and specifications, a complete set of submittals, all addenda and contract modifications, reports, and any other documents required by the contract documents.  Division 01 of the specifications should identify the required record documents and the format.  Like O&M data, record documents are increasingly being submitted in electronic form for ease of storage and retrieval.

Commissioning

If commissioning is required, whether it be systems and equipment commissioning or total project commissioning, then the activities for the commissioning process should begin during this phase of the project closeout.  Commissioning is typically conducted by a third party (i.e. commissioning authority) hired by the owner.

The purpose for conducting commissioning during this phase is to determine if the building is ready for occupancy and identify deficiencies that may be added to the project’s punchlist.  Commissioning activities may be integrated with starting, testing, and adjusting, as well as demonstration and training.  Commissioning may also assist in verifying accuracy and completeness of O&M data.

AHJ Approval

One of the key elements in determining substantial completion is the approval of the project by authorities having jurisdiction (AHJ).  The approval usually comes in the form of a certificate of occupancy for occupied buildings or a certificate of completion or equivalent for unoccupied structures or shell buildings.  Without approval by the AHJ, the owner may not “occupy or utilize the Work for its intended use,” thus, the definition of substantial completion has not been met.

Other Activities

Other tasks that may be required prior to substantial completion may include the transfer of utilities to the owner, delivery of keys and cores to the owner, removal of temporary facilities, and general cleaning of the work.  The contract documents may specify other tasks that must be accomplished in order for the architect to certify substantial completion. 

Additionally, the contractor may request payment for work completed and release of retainage; however, a sufficient amount of money (either retainage, money for uncompleted work, or a combination of both) should be held by the owner to cover the cost of completing and correcting the remaining work if the contractor fails to do so.

POST-SUBSTANTIAL COMPLETION PHASE

Once the date of substantial completion has been certified by the architect, the project enters the next phase of closeout, which will take the project to final completion.  At this point, most of the closeout activities have been accomplished.  The owner has occupied, or is permitted to occupy, the building and typically assumes responsibility for its operation, maintenance, security, and insurance unless stated otherwise in the certificate of substantial completion.

The date of substantial completion also signifies the beginning of the correction period, which is typically one year per AIA Document A201.  During the correction period the contractor is required to correct any deficiencies discovered.  Also, the time periods indicated in project warranties also begin at this time.

Final Acceptance

The contractor’s main task during this phase of the project is to complete or correct the items identified on the punchlist.  Since the owner typically assumes responsibility for the security of the project at substantial completion, the contractor may have to schedule access with the owner.

Since the period for correction and completion of items on the punchlist overlaps the correction period stated in the General Conditions, there may be a need to specify how deficiencies discovered between substantial completion and final completion are handled—they may be added to the punchlist to be corrected prior to final completion, or added as corrective work associated with the correction period.

Once all the items on the punchlist are completed, the contractor must notify the architect that the project is ready for the final inspection.  This notification is required to be in written form and should be accompanied with a copy of the contractor’s final application for payment per Section 9.10.1 of AIA Document A201:

Upon receipt of the Contractor’s written notice that the Work is ready for final inspection and acceptance and upon receipt of a final Application for Payment, the Architect will promptly make such inspection…

The architect, after receiving the written notification from the contractor, will inspect the project to verify that all punchlist items have been addressed.  Additionally, the architect should ensure that any remaining closeout submittals (e.g. extra materials, O&M manuals, record documents, etc.) have been submitted. 

Final Payment

Upon completion of the final inspection and verification that the project is complete, the architect certifies the contractor’s application for payment.  However, before the application for payment can be prepared and submitted by the contractor, final costs need to be determined.

Outstanding proposal requests and change order requests need to be incorporated into a final change order. Any claims in which a disagreement exists can remain open to be handled later through mediation, through arbitration, or in court. 

Also included in the final change order are any final adjustments to allowances.  Outstanding authorizations for allowances are determined and any unused funds are added to the change order as a credit to the owner.

Finally, the final change order may also adjust the contract time through requests for extension.  If time extensions are approved, they must be included prior to any application of a penalty/bonus or liquidated damages clause.  If penalties or liquidated damages are to be assessed, they need to be deducted from the final application for payment before certification by the architect.  Likewise, any applicable bonuses need to be added to the application before certification.

After certifying the final application for payment, the architect will forward the certified application to the owner, who, in turn, makes payment within the time period required by the contract documents.  When the contractor accepts the payment, then final completion is deemed achieved.

***

As the end of a project rapidly approaches, everyone on the project team is eager to wrap things up and move on to the next task at hand.  The contractor may have reassigned the superintendent to another project that is starting up and replaced him or her with another individual with little knowledge of the project, or the contractor may have brought in a team that specializes in project closeouts.  Regardless of who is on the jobsite, project closeout is not the time to relax enforcement of the contract documents.  The provisions in the contract regarding project closeout should be closely followed to ensure a smooth and complete transition is accomplished.

Since this is the time when the owner assumes responsibility for the project, the architect should ensure that the owner is aware of its responsibilities and is regularly informed on the closeout progress.  In addition to the demonstration and training activities, the owner or its representatives (e.g. facilities manager, maintenance team, etc.) can be invited to participate in other closeout activities such as the substantial completion inspection, final inspection, and commissioning.

This article provides an overview of the project closeout process, which is only a part of the architect’s role during construction contract administration.  For more in-depth information on the project closeout process, refer to the Construction Specifications Institute’s Construction Contract Administration Practice Guide.

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¹ The two phases described in this article are not defined or utilized by standardized contract documents (e.g. AIA, EJCDC, ConsensuDOCS, etc.).  The phases are used in this article solely for the purpose of categorizing closeout activities in relation to the date of substantial completion.

Communication During Construction

Everything we do throughout the day could not be accomplished without some form of communication, whether it is one way (e.g. radio and television) or two-way (e.g. email and conversations).  Communication is a key element of daily living, and the construction process is no exception.

Basic Construction Communication

George Bernard Shaw once said, “The single biggest problem in communication is the illusion that it has taken place.”  The essence of communication is that a message is transmitted, received, and understood.  However, in some cases, a message is not understood by the recipient, but the transmitter assumes it was; thus the “breakdown in communication” begins. 

An example of hearing what was said, but not understanding what was said, can be found in the classic baseball skit of Abbott and Costello, Who’s On First.  In the skit, dialogue occurs between the two comedians, but neither one truly understands what the other is trying to say.  In business, and specifically construction, miscommunication can lead to problems that can be costly for some or all parties.

Before getting too deep into the subject of communication, it should be clearly stated that there is a difference between communication and documentation.  Communication may involve documentation, but documentation is not required to have good communication.  However, the construction business relies heavily on documentation, because the construction business is a contractual arrangement.  As in any agreement, the more you have in writing, the better you can defend your position should it fall into question.

Whether during design or during construction, communication is most effective when the four Cs are covered: clear, concise, complete, and correct.  Each one should be considered if you are writing a letter, preparing an email, talking on the phone, or preparing a set of construction documents.  Failure to do so can result in the message being misunderstood, either partially or completely.  How well you communicate has an impact on how you are perceived by others.  Thus, a poor communicator will either have their messages questioned or ignored completely.

The process of constructing a structure involves teamwork.  Like teamwork on the sports playing field, communication is essential to integrate all players to achieve a win.  The motivation of team players to have a successful outcome improves communication and further enhances teamwork.  Thus, a good attitude is important to successful communication.

According to the Construction Specifications Institute (CSI), teamwork communication relies on timeliness of communication.  Delay in transmitting essential information can lead to misunderstandings and eventual escalation of problems.  To avoid these problems, identifying the lines of communication before a project begins is a good practice.  This can be best accomplished at the preconstruction meeting and re-emphasized, if necessary, at the periodic progress meetings.¹

Construction communication channels are dependent somewhat on the delivery method used for the project.  Those delivery methods that have similar communication channels are:

• Design-Bid-Build
• Construction Management as Constructor
• Design-Negotiate-Build

Although the above delivery methods incorporate different means of selecting the contractor, each utilizes the traditional tripartite relationship² of owner, architect, and contractor, which will be the basis of this article and discussed in detail later.

On the other hand, delivery methods that do not utilize the tripartite relationship have very different channels of communication.  These delivery methods include the following:

• Design-Build
• Construction Management as Advisor
• Owner-Build

Regardless of which delivery method is employed on a project, the content that is communicated and the method by which it is communicated between all parties involved remains the same—only the channels through which content is transmitted differ.

At the center of construction communication are the contract documents—the drawings, specifications, contracting requirements, and other documents defined in the agreement.  The contract documents set the foundation for all construction communication.  The contractual network within the traditional tripartite relationship is not the same as the communication network.

The contractual network is between the owner and contractor under an owner-contractor agreement and between the owner and architect under an owner-architect agreement.  In the contractual network, the owner is the focal point.  However, within the tripartite relationship, there are “third party obligations” between the architect and contractor.  Although there is no agreement between the contractor and architect, the contract documents do establish some responsibilities that both must follow.³

In the American Institute of Architects’ (AIA) Document A201-2007, General Conditions of the Contract for Construction, Section 4.2.4 sets the basic communication network for the construction of the project:

…the Owner and Contractor shall endeavor to communicate with each other through the Architect about matters arising out of or relating to the Contract.

The above requirement thus places the architect as the focal point as it relates to the communication network of a construction contract.

AIA Document A201 further defines the communication channels with the architect’s consultants, with the contractor’s subcontractors and material suppliers, and with the owner’s other contractors:

Communications by and with the Architect’s consultants shall be through the Architect. Communications by and with Subcontractors and material suppliers shall be through the Contractor. Communications by and with separate contractors shall be through the Owner.

Regardless of the above, AIA Document A201 does allow other channels of communication when the contract documents allow it or when it has been given approval:

Except as otherwise provided in the Contract Documents or when direct communications have been specially authorized…

In regard to the latter condition, permitted direct communication should be relegated to situations where direct communication will expedite the process and minimize the potential for misunderstanding.  For example, allowing the mechanical engineer to speak directly with the mechanical subcontractor will likely benefit the project by putting together the two people who can carry on a dialogue on a technical subject matter without transmission through an intermediary.  If decisions are made as a result of the direct communication, those decisions should be documented and copied to the necessary individuals.

When communicating with the contractor, any information passed on to the contractor’s superintendent is deemed to have been transmitted to the contractor per AIA Document A201, Section 3.9.1:

The superintendent shall represent the Contractor, and communications given to the superintendent shall be as binding as if given to the Contractor.

In several locations throughout AIA Document A201, there are provisions that require one party to give written notice to another party.  To clarify this requirement, Section 13.3 defines what constitutes “written notice”:

Written notice shall be deemed to have been duly served if delivered in person to the individual, to a member of the firm or entity, or to an officer of the corporation for which it was intended; or if delivered at, or sent by registered or certified mail or by courier service providing proof of delivery to, the last business address known to the party giving notice.

So far, the discussion has addressed how important good communication is for teamwork and who can talk to whom according to the contract requirements.  The next step is to identify the varieties of communication that can be used during the course of construction.

Types of Communication

In very basic terms, there are two types of communication: verbal and nonverbal.  Verbal communication involves the use of words, both written and spoken, to relay a message.  On the other hand, nonverbal communication utilizes methods that do not involve words, such as signals, drawings, and symbols.  Contract drawings utilize both methods: specifications and notes (verbal) and drawings (nonverbal).  Even when we talk with others we use both types of communication:  speech (verbal) and body language (nonverbal).  Since this is not an article on drawings, it will focus only on the types of verbal communication.  As previously mentioned, verbal communication includes written and spoken (i.e. oral) methods. 

Oral communications include telephone conversations or other transmitted conversations that do not require participants to be in the same location.  The face-to-face conversation, such as at a meeting or site visit, is another form of oral communication where the participants are in the same location.  Advantages of oral communication include the following:

• Can use inflection and nonverbal cues.  Feeling can be easily expressed through speech by how it is spoken.  Body language can further enhance the oral message.
• Saves time and provides immediate feedback.  Unlike written communication, which requires a somewhat rigid back-and-forth process, oral communication allows a more fluid dialogue.
• Is typically less formal.  With the exception of prepared speeches and scripted dialogue, oral communication is relatively informal and is not restricted by rigid formats other than common civil courtesy.
• Can be confidential.  Unless the conversation is being recorded, oral communication is limited to those present.

Conversely, oral communication has its disadvantages:

• Can be misunderstood or misinterpreted.  Oral communication is contingent upon the speaking skill of the speaker and the listening skill of the recipient.
• Generally, there is no permanent record and messages are not easily retained. Unless the conversation is recorded, there is no exact account of what was said, and people tend to forget conversation details over time.
• Not the best method for lengthy communications.  Except for speeches or other presentations, most oral communications are dialogues consisting of short messages.

Written communication utilizes a multitude of media to present messages.  In general applications, not specific to construction, written communication includes, but is not limited to, the following:

• Correspondence
• Emails
• Transmittals
• Faxes
• Meeting minutes
• Text messages
• Social media

More specific to the construction process, written communication includes specific documents or media, such as:

• Requests for information/interpretation (RFIs)
• Proposal requests
• Change order requests
• Change orders
• Field observation and daily reports
• Submittals
• Web-based project management systems

Like oral communication, written communication has its advantages and disadvantages.  The advantages consist of the following:

• Provides a permanent record and can be used as evidence.  The message written one day is the same message available weeks, months, and even years later.
• Is less likely to be misunderstood or misinterpreted.  Unlike oral communication, written communication can be reread until the message is understood.
• Can be disseminated quickly and widely.  In this technology-based society, the written communication can be sent to all parties in a timely manner.

In a contractual environment, the disadvantages are few, but important.  They are:

• Provides a permanent record and can be used as evidence.  The advantage can be a disadvantage, too.  In preparing documents, be judicious about what you place in the permanent record.
• Requires some level of skill.  Not everyone is a good writer.

Required Construction Communication

AIA Document A201 establishes the roles and responsibilities of the tripartite relationship: owner, architect, and contractor.  These roles and responsibilities involve a certain minimum level of communication—some are conditional, others are not.  Conditional communication means that a certain condition must exist in order to require the communication, such as the contractor’s notice to the owner that the contractor will stop work for nonpayment.  In that example, the notice is only required when the condition of nonpayment by the owner exists.  The following is a general list of communications established in AIA Document A201, broken down by the entity responsible for the communication’s preparation:

Owner

§2.1.2 – 15 days after written request, furnish information for lien rights.

§2.2.1 – After written request and prior to commencement of construction, provide evidence of financial arrangements.

§2.2.4 – Furnish information with reasonable promptness.

§2.3 – Written order to Contractor to stop the Work.

§2.4 – Written notice to Contractor for failure to carry out the work.

§9.8.5 – Written acceptance of responsibilities in Certificate of Substantial Completion.

§10.2.8 – Written notification to Contractor of injury or damage.

§13.5.2 – Written notice to Architect to authorize additional testing and inspections.

§14.2.2 – Written notice to Contractor that the contract will be terminated for cause.

§14.3.1 – Written notice to Contractor that the contract will be suspended.

§14.4.2 – Written notice to Contractor that the contract will be terminated for convenience.

§15.1.2 – Written notice to Contractor of claim.

Contractor

§3.2.2 – Report errors, inconsistencies, or omissions to Architect as an RFI.

§3.2.3 – Report nonconformities to laws, statutes, ordinances, codes, rules, and regulations in the Contract Documents.

§3.3.1 – Written notification to Owner and Architect that means, methods, methods, techniques, sequences, or procedures in the Contract Documents are not safe.

§3.7.4 – Provide notice to Owner and Architect for differing site conditions.

§3.7.5 – Notification to Owner and Architect of burial, archaeological, or wetlands encountered.

§3.9.2 – Written notification to Owner of proposed superintendent.

§3.10 – Submittal of schedule.

§3.12 – Submittal of Shop Drawings, Product Data, Samples, and other submittals.

§5.2.1 – Furnish to Owner names of subcontractors and major material suppliers.

§6.1.3 – Cooperation with Owner’s other contractors.

§6.2.2 – Report to Architect of defects in work of Owner’s other contractors if impacting Contractor.

§9.2 – Submittal of schedule of values.

§9.3.1 – Submittal of Applications for Payment.

§9.7 – Stop Work notification to Owner for nonpayment.

§9.8.2 – List of items to be completed or corrected.

§9.8.5 – Written acceptance of responsibilities in Certificate of Substantial Completion.

§9.10.1 – Written notification for final inspection.

§10.2.8 – Written notification to Owner of injury or damage.

§10.3.1 – Written notification to Owner and Architect of hazardous materials encountered.

§13.5.1 – Timely notice to Architect of tests and inspections.

§14.1.3 – Written notification to Owner and Architect that Contractor will terminate the contract for cause.

§15.1.2 – Written notice to Owner of claim.

Architect

§3.7.4 – Written notification of negative finding to Owner and Contractor on differing site conditions.

§4.2.3 – Keep Owner reasonably informed about the progress and quality of the Work.

§4.2.7 – Take action on submittals.

§4.2.8 – Prepare Change Orders, Construction Change Directives, and minor changes.

§4.2.11 – Written interpretations on matters concerning performance and requirements from Owner and Contractor.

§4.2.14 – Respond to RFIs.

§9.4.1 – Written notification to Owner and Contractor with reasons for withholding payment.

§9.8.4 – Prepare Certificate of Substantial Completion.

§12.1.1 – Written request to Contractor to uncover work required to be inspected by the Contract Documents.

§12.1.2 – Request to Contractor to uncover work not required to be inspected by the Contract Documents.

Communication may be further defined in the specifications by the architect.  Within each section, submittals and other forms of documentation are usually required of the contractor.  However, the majority of the communication requirements can be found in Division 01, General Requirements.  The Division 01 sections that could specify significant communication requirements include the following:

01 10 00 – Summary:  If the work is in an existing building, coordinating with occupants and notifying occupants about utility interruptions; and if multiple prime contractors are involved, coordinating with other contractors.

01 25 00 – Substitution Procedures:  Preparing and reviewing substitution request packages.

01 26 00 – Contract Modification Procedures:  Preparing contractor proposal requests.

01 29 00 – Payment Procedures:  Preparing the schedule of values and applications for payment.

01 31 00 – Project Management and Coordination:  Coordinating procedures, preparing RFIs, setting up and operating a project website, and conducting project meetings.

01 32 00 – Construction Progress Documentation:  Preparing construction schedules, reports, and construction photographs and videos.

01 33 00 – Submittal Procedures:  Preparing submittals.

01 77 00 – Closeout Procedures:  Preparing list of incomplete items (punch list).

01 79 00 – Demonstration and Training:  Training owner’s personnel on how to operate the building’s systems and equipment.

Communication Tools and Methods

Although the contract documents establish minimal communication requirements, communication takes place at all times and under a variety of conditions.  Communication tools and methods utilized during construction should be appropriate to those times and conditions.   For example, you do not want to use a telephone conversation to issue a change order—the provisions of the contract must be enforced.  Although there are many ways to communicate, construction communication is generally limited to basic tools and methods; however, as technology changes, the tools and methods will likely change, as well.

The first method is the formal meeting.  This is a prescribed meeting, usually with an agenda and a list of required attendees.  The meeting may be routine or a singular event scheduled at a specific time during the construction process.  Minutes of formal meetings should be taken and distributed to attendees and other identified individuals shortly after the conclusion of the meeting, generally within a few days.  This allows attendees to comment on the accuracy of the minutes while the meeting is fresh in everyone’s mind.  The person identified to conduct the meeting should not be the person taking the minutes.  Typical formal meetings during construction include:

• Preconstruction meetings
• Progress meetings
• Contractor/subcontractor meetings
• Preinstallation meetings
• Closeout meetings

The next method is the informal meeting.  These meetings are typically unscheduled and may be called to address a specific issue and probably occur more frequently than formal meetings.  Attendees may consist of a group of individuals down to as small as two individuals.  Informal meetings may not be scheduled at all, but occur out of happenstance, such as a conversation during a site visit.  Informal meetings can be very beneficial for a project—they allow for immediate discussion that can result in a quick solution to an issue.  However, decisions that are made or directions that are given during these informal meetings should always be followed up with some form of written communication.  This is to make sure that there are no misunderstandings or misinterpretations of what was discussed.

Another common and traditional construction communication tool is the telephone.  Telephone communications can fill the gap between written media and face-to-face dialogue—it is quick and can be used to accomplish a variety of tasks without having to travel to another location.  The telephone conversation, like the informal meeting, can be used to discuss issues with possible immediate results, but it should also be documented if important decisions were made or instructions where given.

Reports are another tool that provides beneficial information for all members of the project team.  Reports are used to record and convey information about the status or condition of the project or a portion of it.  Reports may be generated by all members of the project team, such as field observation reports by architects, daily reports by contractors, or installation quality control reports by manufacturer representatives. The most important thing to remember about a report is that it be factual—conjecture, hearsay, and judgmental language have no purpose in a report.  In cases where a picture explains the situation better than words, a photograph can be inserted into a report with a brief explanation and markups that highlight specific items (e.g. keynotes, clouds, etc.). 

Reports, which document details that are typically lost over time, could be used as evidence.  However, poorly prepared reports may be considered inadmissible as evidence.  Once the quality of some reports are determined to be questionable, then the entire set of reports by the same individual are also called into question and may be considered unreliable, even if the remaining reports are actually good and accurate.

Growing at a rapid rate is the use of electronic communications during construction.  Starting with faxes, the use of electronic communications has expanded to include email, text messaging, and, now, social media, such as Facebook, LinkedIn, and Twitter.  Electronic communications can also include web-based software programs that provide full project management capabilities.  Electronic communications are typically used in addition to other communication tools and methods.  The main benefit of electronic communications is the ability to store and quickly retrieve documents.  As with database systems, information can be searched in a fraction of the time it would take to search file folders and storage boxes.  Like printed documents, electronic communications are subject to discovery⁴ and can be used as evidence.

Another method of construction communication does not happen within the team, but with the public.  Used frequently on large public projects and sometimes on private projects, public communication allows people not associated with a project to be informed of the progress of the work.  Since public projects involve public funding, citizens like to know how their tax dollars are being spent.  Some projects, public or private, have a significant impact on the communities in which they are built.  Keeping neighboring residents informed helps to soften the impact the dramatic changes may bring.

Communication tools that are used to keep the public informed can span the entire list presented in this article.  Written communications, such as news articles and mailed flyers provide updates.  Oral communications may include periodic meetings with residents and recorded updates that people can obtain through a phone call.  A common tool used is the project website, where information and updates are posted on a regular basis.  Some websites employ webcams that operate during the entire construction period to allow people to visually see the progress of the work.

The bottom line is that the construction process could not happen without communication.  From the contract documents through all the phone calls, emails, and meetings, to the final application for payment, every member of the project team communicates at some time with another project team member.  As a project team member, it is important to remember that other team members are relying on the information you provide.  If you have information to provide, make sure it is timely and that it is communicated through the proper channels using the proper method or tool.

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¹  Introduction to Chapter 6, Construction Contract Administration Practice Guide, The Construction Specifications Institute.

² The tripartite relationship is discussed in detail in Chapter 5 of CSI’s Project Delivery Practice Guide.

³ Although not pertinent to this article, it is important that the architect’s responsibilities in the contract documents be coordinated with the owner-architect agreement.

⁴ Discovery is a legal process where the parties on each side of a lawsuit seek information from the other side to uncover the facts about the case.  Discovery is governed by state and court rules of evidence.

Substitutions: Flexibility within Limitations

All manufacturers wish that their product or products are used on construction projects; otherwise, they would not be in the business.  But, on the design side, not every product is suitable for a given project, nor is there sufficient fee to research every product that could potentially be used on a project.  Therefore, with few exceptions, most design professionals focus on one or two potential products for design purposes, which leave other possible products waiting in the wings.

How these other possible products make it into the project depends on what the construction documents provide in the form of substitution procedures.  Substitution of specified or indicated products has probably been around as long as building construction has been in existence.  However, throughout the history of construction, there was no formalized substitution process developed for construction professionals to implement until the 1960’s.

At the beginning of the 1960’s, an innovative Arizona architect by the name of Fred M. Guirey, FAIA, developed the “prior approval” system, which allows specifications to be concise by using brand names, but allows bidders to submit “equal” products.  Guirey’s goal was to achieve the lowest price for the owner at minimal risk for the contractor, while at the same time conforming to governmental requirements for competitive bidding.  In 1962, Guirey hired Maynard Blumer, FAIA, FCSI, and tasked him to further define the prior approval process.  As a result, Blumer developed a process that consisted of eleven rules.  Twelve years later, Blumer’s prior approval process was integrated into standard AIA documents.  Thus, the formalized substitution procedure was born.¹

The substitution process is beneficial for all parties: owners, contractors and subcontractors, design professionals, and construction product manufacturers; however, the process needs to be regulated with clear and concise provisions in the procurement and contract documents.

Specifications

Before a discussion of how substitutions should be handled in the procurement and contract documents, a discussion on the more basic topic of how products should be specified is necessary.  In order for the manufacturer to prepare a meaningful substitution request and for the design professional to make a fair comparison, the specifications should state the essential characteristics of an acceptable product.

Specifications for privately funded construction projects can be proprietary, but if the owner wants to keep its options open to maximize performance, minimize cost, or both, then substitutions are a means to achieve that.  For publicly funded projects, procurement regulations at all levels of government (federal, state, county, and local) require some form of open competition.  For example, the Federal Acquisition Regulation (FAR) 6.101, which references the United States Code (U.S.C.), states that Government contracts shall “promote and provide full and open competition.” 

However, this does not preclude the use of proprietary specifications as long as the specifications are “open,” which means the submission of proposed substitutions is available to bidders.  For example, the FAR states the following in Section 6.302-1 (c):

Brand-name or equal descriptions, and other purchase descriptions that permit prospective contractors to offer products other than those specifically referenced by brand name, provide for full and open competition and do not require justifications and approvals to support their use.

Many government agencies take the quote above literally and require that the specifications, when listing a brand name, must follow it with “or equal.”  When listing specific manufacturers and products, some agencies have established policies that require at least three products or manufacturers be listed—some going as far as requiring the minimum three plus the “or equal.”  The problem with using “or equal” in a specification is the conundrum of what is considered “equal”?  There are many products out on the market, but very few would be considered “equal” to other like products.

A specification that lists just a brand-name product (sometimes referred to as a “basis-of-design” product) and “or equal” or its equivalent, does not provide the essential information to make a comparison for proposed substitutions.  Many manufacturers provide product sheets with a long list of characteristics and performance data.  For specified brand-name products, using these lengthy lists of information is a poor basis for reviewing substitutions, since no two products are exactly alike (i.e. equal); leaving reviewers to ask the question: Which features are most important?  Therefore, when using a brand-name product, the specifications should additionally identify the minimum characteristics and performance data that are required for the project. 

Limiting product requirements to essential characteristics and performance data can simplify the substitution review process and allow broader competition.  Manufacturers seeking substitution approval need only to meet or exceed the minimum specified requirements.  Thus, if “or equal” is required, then it would be advisable that Division 01 define the term as a comparable product that meets or exceeds specified requirements.

Procurement Documents

If substitutions are permitted during the procurement of a construction project, the procurement documents² should establish the requirements in the “instructions to bidders” or similar document.  AIA Document A701-1997, Instructions to Bidders, provides basic requirements for submitting substitutions in Section 3.3.

AIA Document A701 essentially allows substitution requests to be submitted up to ten days before the date established for the receipt of bids.  Any approved substitutions are to be issued in an addendum.  Since the latest an addendum can be issued is four days prior to date of receipt of bids (AIA Document A701, Section 3.4.3), the length of time that the architect and its consultants have to review substitution requests is six days—this does not allow much time for review. 

Therefore, some ground rules should be established in the procurement documents to make sure the architect and its consultants have the data and time to make intelligent decisions when reviewing substitution requests.  For design professionals, making an intelligent decision is vital, since the approval of a substitution carries the same liability as if the design professional directly specified the substituted product in the original documents.

If AIA Document A701 is not used, then the document used to instruct bidders on the bidding process needs to include the provisions in the following paragraphs plus the provisions similarly covered in the AIA document.  If AIA Document A701 is used, then the following provisions need to be included as supplementary instructions (or annotated revisions to electronic documents).  

One provision that should be in the procurement documents is the format in which substitution requests must be submitted.  It should not be the design professional’s responsibility to research a proposed substitution to determine its acceptability; the burden of proof lies with the submitter.  To standardize the submission format, a form, such as the Construction Specifications Institute’s (CSI) Form 1.5C, Substitution Request (During the Bidding/Negotiation Stage), may be used.  The submitter should also provide sufficient documentation, such as product data, drawings, test results, or performance data, to substantiate the substitution’s compliance with specified requirements. 

Other provisions should include the specific date, time, and location for submitting substitution requests, and possibly who is authorized to submit a substitution request.  Regarding the latter, some jurisdictions and A/E firms will only allow substitutions to be submitted by a prime bidder—not from a subbidder or a manufacturer.  The benefit of this requirement is that it helps to filter out those products that a prime bidder has no interest in using, thereby eliminating unnecessary review time.

Contract Documents

To comply with competition requirements in public procurement regulations, allowance of substitution submissions is only necessary during the procurement phase.  Once a contract is executed, substitutions may or may not be allowed according to the contract documents.  AIA Document A701 states in Section 3.3.4 that “No substitutions will be considered after the Contract award unless specifically provided for in the Contract Documents.”  Therefore, if substitutions will be permitted after contract award, the specifications need to establish substitution procedures, since the procurement requirements are not a part of the contract documents.

Requirements for substitutions may be specified in Section 01 25 00 “Substitution Procedures.”  Included in those requirements should be the conditions upon which a substitution request may be permitted.  These conditions can be divided into two main categories:  substitutions for cause and substitutions for convenience. 

“Cause” refers to conditions that are beyond the contractor’s control.  These may include situations where the specified product is no longer manufactured, is unsuitable for the intended use, or is unavailable due to circumstances unforeseen by the contractor, such as a labor strike or a natural disaster or event that delays production, thereby affecting the project schedule.  The contractor’s failure to obtain in a timely manner the specified product (e.g. a contractor-caused submittal delay, contractor did not take into consideration for long-lead time, etc.) is not considered a justifiable substitution request for cause.

“Convenience” refers to conditions that benefit the contractor, the owner, or both.  If permitted, the contractor may submit a substitution request if there is a significant advantage, such as lower cost in labor, material, or both; quicker delivery time; or other benefit to the owner.  Unless shared savings is a part of the contract, any cost savings should go to the owner.

Owners may also initiate a substitution for a number of reasons.  When requested by the owner, the design professional should prepare a request for proposal and issue it to the contractor for determination of cost and schedule impacts.  Design professionals should also review proposed owner-initiated substitutions for possible impacts on the performance of the building, such as compatibility with other specified products and systems.  If the design professional determines there is a cause for concern, then it should be brought to the owner’s attention. 

If whether for cause, convenience, or initiated by the owner, a substitution request is a change to the contract documents and should be treated as such.  AIA Document A201-2007, General Conditions of the Contract for Construction, requires that substitutions be made through a change order or construction change directive, unless the substitution qualifies as a minor change.  A minor change applies when there is no change in contract cost or time and the substitution is consistent with the intent of the Contract Documents.  As to the latter, if the substitution is a completely different type of material or product, it may be considered inconsistent with the intent of the contract documents, thereby requiring the use of a change order, even if there is no change in contract cost or time. If the substitution qualifies as a minor change and was not initiated by the owner, it is recommended that the owner be informed of any proposed substitutions.

As with procurement documents, the requirements for submitting substitution requests should also address time and format for submission.  Substitutions for cause should be allowed at any time during the construction period.  However, substitutions for convenience should be limited to the initial weeks of the project.  Whether this period begins following the award of the contract, after the notice to proceed, or after the start of construction, is up to the owner and design team.  The format should be similar to that for substitutions during the procurement stage.  For the construction phase, CSI has Form 13.1A, Substitution Request (After the Bidding/Negotiation Phase), which is available for use.

The Design Professional’s Review

As previously mentioned, when the design professional approves a substitution, it carries the same liability as if it was specified in the construction documents.  Therefore, design professionals need to treat substitutions with the same care and attention they gave the products they specified in the construction documents.

CSI’s Construction Contract Administration Practice Guide identifies six areas in which the substitution request should be reviewed.  These areas, and some of the questions that should be asked, are as follows:

• Product:  Does the substitution’s characteristics meet or exceed the minimum specified requirements?
• Manufacturer:  How long have they been in business?  How do they respond to problems?  What is their delivery track record?
• Product Representative:  Is the person knowledgeable about the product and does she or he respond quickly to questions and problems?
• Installation/Installer:  Are there unique installation requirements?  Are installers available in the area?  Does the substitution require a certified installer?
• Operation and Maintenance Costs:  Will the product cost more to maintain than the specified product?
• Warranty:  Does the warranty for the substitution provide protection similar to that of the specified product?

During bidding, if AIA Document A701 is used on a project, the last sentence of Section 3.3.2 states “The Architect's decision of approval or disapproval of a proposed substitution shall be final.”  Thus, if a substitution request is not approved, then bidders must base their bids on the specified product or products. 

During construction, approval is based on the issuance of a change order, change directive, or minor change, as previously mentioned.  If a substitution is not approved by the architect using one of these methods, then the contractor must use the specified product or products.

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Substitutions need not have the negative image that they typically carry.  If all parties understand and comply with the requirements, the substitution process will go smoothly.  Contractors, subcontractors, suppliers, and manufacturers should not submit substitutions solely on the hope of increasing a profit margin, but to provide equal or better performance than the specified product.  Design professionals should review substitutions with impartiality, but with their liability in mind, and should use the same impartiality when informing and advising the owner of any substitution requests.  Finally, owners should not be swayed by a quick sales job and a promise of reduced cost to approve a substitution request—careful analysis should always be applied.

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¹ “Prior Approval, A Specification System,” H. Maynard Blumer, The Construction Specifier, pp 80-84, April 1986.

² Although commonly referred to as “bidding documents,” this article uses the CSI term “procurement documents,” since not all construction documents are bid due to the variety of available project delivery methods.  However, this article uses the terms “bid” and “bidder” regardless if the entity is submitting a bid or proposal.

 

Contract Modifications

 

Unlike most products, which undergo research, development, testing, and evaluation of prototypes to work out problems, most buildings are one-of-a-kind construction.  Therefore, construction does not have the luxury of working out the kinks before it is fabricated for the buyer—changes are typically necessary to adjust the design as the work progresses.  These changes are usually handled through what is commonly referred to as a contract modification.

Contract modifications are just that: modifications or changes to the requirements of a contract; in this case, construction contracts.  Contract modifications typically carry a negative connotation, especially to owners, as evidence of poorly prepared construction documents.  Although changes are more common than not, a large number of changes or a few changes with significant associated costs are definitely not desirable, and do have some relevance to the quality of the A/E-prepared documents.  But it should be made clear that not all changes are the result of errors in the drawings and specifications.

The American Institute of Architects (AIA) establishes provisions for contract modifications in its Document A201-2007, General Conditions of the Contract for Construction, in Article 7, “Changes in the Work.”  This article states that changes to the contract may be issued through three basic instruments:  the minor change in the work, the change order, and the construction change directive.  Let us review these individually in detail.

The Change Order

The change order is the more well-known and infamous change instrument provided for in contracts.  According to AIA Document A201, the change order is a written document that is prepared by the architect and signed by all three entities:  architect, owner, and contractor.  When signed, all three entities agree that there is a change in the work and that there is a change in the contract sum, contract time, or both.  The process begins typically in one of two ways. 

The first involves architects issuing a proposal request to the contractor, either on their own volition or at the request of the owner.  The proposal request is not an authorization for the contractor to perform the work, but a means of getting information from the contractor (usually price and time) so that the owner can make a determination of whether or not to proceed with the proposed change. 

The other involves the contractor issuing a request for a change to the owner, through the architect, after discovering a condition that needs additional work, such as an unforeseen condition, a constructability issue, or additional work not addressed by the contract documents.  This is commonly referred to as a “claim” submitted by the contractor.  A “claim” is defined by AIA Document A201 as a

demand or assertion by one of the parties seeking, as a matter of right, payment of money, or other relief with respect to the terms of the Contract.

Not all claims result in change orders, nor are all change orders the result of claims.

The document that the contractor submits to the architect, whether in response to an owner- or architect-issued proposal request or contractor claim, is commonly referred to as a change order request, or COR.  However, some contractors may use other names to identify documents that serve the same purpose.

The Minor Change

The minor change in the work, or minor change for short, is described in AIA Document A201 as a contract change “not involving adjustment in the Contract Sum or extension of the Contract Time.”  Unlike the change order, the minor change does not require the signatures of the owner and contractor—just the architect’s.  Once the minor change is issued, the change is binding on both the owner and the contractor.

Although called a “minor” change, the scope of the change is really irrelevant as long as there is no alteration in cost or time.  For example, a significant portion of the work can technically be modified by a minor change, provided the contractor agrees that there will be no increase or decrease in cost, extension or reduction in contract time, or combination of both.  While possible, the likelihood of a large modification being accepted without a change in cost or time is relatively small.

The A/E should attempt to issue minor changes when, in their best professional judgment, they foresee no expected cost or time change.  However, that is not always the case, and the A/E should not be completely surprised if the contractor responds to the minor change with a COR. Sometimes there are costs or time elements associated with the minor change of which the A/E may not be aware.  If there is any possibility that a minor change might have a cost or time change associated with it, the A/E would be well-advised to discuss the proposed minor change with the contractor before issuing.

The Change Directive

The change directive is an instrument of change that is not as common as the other two.  In AIA Document A201, the change directive is referred to as the construction change directive, commonly referred to as a CCD.  Its purpose is to issue a change to the contractor that affects the contract sum, the contract time, or both; however, the difference between the change directive and the change order is that the change directive is used when there is no agreement on either cost or time.  Thus, the change directive is used when at least one of the two following conditions exists:

1. When delaying the work in the change directive until an agreement is reached would affect the overall project.
2. When there is insufficient information available to the contractor to accurately price the additional work or determine the extent of the additional time required.

Examples of the former condition would be an unidentified utility discovered during site excavation which requires relocation before any foundation work can begin, or the owner requires a necessary change but an agreement cannot be reached, potentially delaying the project.  For the latter condition, an example would be rock excavation, where the extent of removal is unknown.  This example could be determined based on unit prices submitted during the procurement or bid process.

The change directive is also unlike the other two contract modifications in that the change directive is only signed by the owner and the A/E.  Once issued, the contractor must proceed with the work indicated in the change directive.  If the contractor signs the change directive, then the contractor agrees to the change in the contract sum and time or the method used to determine them, and a change order should be prepared to record that agreement.

Methods of adjustment indicated in AIA Document A201 include a mutually accepted lump sum amount, unit prices as previously mentioned, a cost determined in an agreed upon manner with a fixed or percentage fee, or, if the contractor does not agree with the other methods, a determination by the A/E based on cost of labor and materials plus overhead and profit.

Once the contractor completes the work required by the change directive, the issues of cost and time would need to be addressed.  If agreement is reached, then a change order is required to record the modification to the contract.  Otherwise, the claim becomes a dispute, and the method for handling the disagreement follows the dispute resolution procedures of the contract.

Contractors subject to the provisions of AIA Document A201 may view the change directive negatively, since it effectively requires the contractor to finance the work required by the change directive if there is a dispute.

Contract Modification Forms

Although AIA Document A201 describes the three methods of modifying a construction contract, it does not indicate the actual forms that will be used for each—a situation where a Division 01 section should be used.  Section 01 26 00 “Contract Modification Procedures” should be included in a project manual to specify exactly which forms will be used to record official changes to the contract.

For change orders, AIA Document G701, Change Order, can be used to record the modification.  Change directives can utilize AIA Document G714, Construction Change Directive, and minor changes typically are issued using AIA Document G710, Architect’s Supplemental Instructions, or ASI.

For each of these documents, owners and A/E firms may utilize custom forms suited to their specific procedures and requirements.  These alternate forms may also come with a different name; for example, some A/E firms use the “bulletin” or “field order” in lieu of the ASI.  If forms other than the standardized ones mentioned earlier are to be used, the specifications should clearly indicate that.  Additionally, sample forms should be included in the project manual so all members of the project team are familiar with the documents.  These sample forms can either be included as an attachment to Section 01 26 00 mentioned earlier or included in Division 00 under 00 63 00 “Clarification and Modification Forms.”

When requesting the cost and time impact for a proposed change, AIA Document G709, Work Changes Proposal Request, may be issued to the contractor.  Use of a single format for proposal requests will help reduce confusion by eliminating other sources of requests, which make it difficult to track the request and for the contractor to determine what is and is not an official request.

In every case, the change document or proposal request should clearly describe the scope of the change or proposed change so there are no misunderstandings.  There is no limit on the number of attachments to these documents, so additional pages for description, specifications, and drawings can be added.  A word of caution, though, additional drawings and specifications may require a professional seal; consult your state licensing board rules and laws to verify.

Contract Modifications and ConsensusDOCS

Less common than the AIA documents are the ConsensusDOCS, where DOCS stands for Designers, Owners, Contractors, and Surety—an acronym that has virtually disappeared from ConsensusDOCS publications.  The ConsensusDOCS’ equivalent to the AIA Document A201 is the ConsensusDOCS 200, Standard Agreement and General Conditions between Owner and Constructor¹.  In the ConsensusDOCS 200, there are three methods to modify a contract:  the change order, the interim directed change, and the incidental change.

The change order, as defined in ConsensusDOCS 200, is a “written order…indicating changes in the scope of Work, the Contract Price, or Contract Time.”  Like AIA Document A201, the change order in ConsensusDOCS 200 is used for changes that affect contract time and cost.  Additionally, the change order under the ConsensusDOCS 200 only requires the signatures of the owner and constructor—the A/E is not a part of the change order process—which could increase the risk for the owner and constructor.

The interim directed change is the ConsensusDOCS’ version of the change directive.  The primary difference between the interim directed change and a change directive is that if an agreement cannot be reached on the directed change the owner is required to pay the constructor 50% of the estimated cost.  This seems to be reasonable; however, the imprecise grammar used does not indicate upon whose estimate the 50% is based—the owner’s or the contractor’s—which could potentially compound the already disputed change.

It is interesting that, although more construction changes involve a cost increase than not, the ConsensusDOCS 200 does not direct the constructor to pay the owner 50% if there is an estimated decrease in cost.  Furthermore, as with the change order, the interim directed change also does not involve the A/E in the change process; only the owner is required to sign the interim directed change document.

The incidental change is the ConsensusDOCS’ equivalent of the AIA’s minor change in the work, since it does not involve a change that adjusts the contract time and cost.  According to ConsensusDOCS 200, the “Owner will initiate an incidental change” with a written order to the constructor—again, the A/E is not a part of the change process. 

Follow the Rules

Construction documents are not meant to be perfect and owners and contractors need to understand that.  Whether the result of imperfect documents, unforeseen conditions, or owner-directed revisions, changes on a project are almost always inevitable.  The key to a successful project is to comply with the requirements of the contract.  The general conditions, whether based on AIA, ConsensusDOCS, or some other format, need to be read and understood by each member of the project team in order to abide by the processes and timeframes established within.

It is understandable that owners, A/E firms, and contractors have a desire to streamline procedures or overlook certain steps in order to expedite an issue and to keep the project moving along.  The occasional deviation from contract procedures may be necessary, especially if it benefits the project.  But repetitive deviations or total disregard for contract procedures would likely have negative results.

There are cases where verbal orders for changes or extra work were issued by the owner and the contractor performed the work as requested.  However, when the contractor requested payment for that work, the owner rejected the claim stating that the work was performed without written authorization, such as a change order.  Contractors are not without options in these cases.  Such claims have been upheld in court on the basis that the parties’ conduct waived the change order provisions of the contract.  Contractors should be well aware of who is authorized to order changes and extra work.

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There is no substitution for clear, concise, complete, and correct documents, but mistakes do happen.  The introduction of building information modeling (BIM) has helped to some degree to limit the number of errors, but improper application of technology could create more problems than it solves.

In a recent survey of owners², over 25% indicated that the quality of construction documents is somewhat worse than before with 5% stating it is much worse.  It is hard to speculate the reason of such high percentages:  Are construction documents actually getting worse, or has the recent influx of technology raised owners’ expectations?

Until that question can be answered objectively, the contract modification will likely remain the barometer for measuring construction document quality.  

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¹   ConsensusDOCS documents have generally replaced “contractor” with “constructor.”

²   FMI/CMAA Eleventh Annual Survey of Owners; http://www.cmaanet.org/files/shared/11thAnnualOS-PhoenixRising.pdf.